Complaint lodged over prospect of Northern Australia Infrastructure Facility partially funding 400km rail line
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| Environmental Justice Australia says government should not provide $1bn loan to build rail line from Adani’s proposed Carmichael mine. Photograph: Sam Panthaky/AFP/Getty Images |
A $1bn federal loan to builders of a railway line between the
proposed Adani coalmine and the coast would be a direct breach of
government policy, a legal group has claimed.
Environmental Justice Australia has lodged a formal complaint with the Productivity Commission over the prospect of the Northern Australia Infrastructure Facility partially funding the 400km rail line.
It is believed two companies – an Adani-related entity and the rail company Aurizon – have made rival bids for $1bn in government loans.
But EJA said government funding of the line would be a clear breach of competitive neutrality principles and potentially against the criteria of the “developing the north” white paper.
Competitive neutrality principles require governments not to use their legislative or fiscal powers “to advantage their own businesses over the private sector”, according to government agreements.
“We submit that for the Adani and Aurizon proposals there is no ‘market failure’ and Naif support would encroach upon the domain of the private sector in breach of competitive neutrality principles,” said the complaint, filed on behalf of the Institute for Energy Economics and Financial Analysis.
“We also submit that the Naif is non-transparent, ineffective, inefficient and has an inadequate governing framework.”
EJA based its complaint on a report by the Productivity Commission into the Export Finance and Insurance Corporation in 2012. It said said the commission found Efic should cease supporting onshore resource projects and related infrastructure because the private sector was already active in that market.
It also suggested the framework of Efic and Naif were similar, in that it had a “market gap” not “market failure” mandate.
The Naif’s mandate also dictates it must only fund projects which the board is satisfied would not otherwise receive financing.
An EJA lawyer, David Barnden, said the same finding should apply to the rail line. “Whether it’s Adani or Aurizon you’ve got a mature market where private sector is best placed to understand these risks,” he said.
“Our argument is this is a mature financing market, where there’s no market failure. The information is out there, the players know about the risk.”
EJA said there was a clear demarcation between what the government and private business should do in the “developing the north” white paper.
Naif’s mandatory criteria also includes the requirement that the funded project be of benefit to the public and “serve or have the capacity to serve multiple users”.
While Adani’s proposal for the rail line is believed to be for its sole use transporting coal between the Carmichael mine in the Galilee basin and the coastline for export, Aurizon’s has reportedly scoped for a multi-use line – albeit with Adani as the sole operator initially.
Barnden said this did not affect the group’s complaint, and suggested Aurizon would have difficulty justifying a proposal for a multi-user line because the Abbot Point terminal on the coast only had capacity for Carmichael.
“I think we’re reasonably confident that the commission will make findings which would lead to recommendations to the minister to not finance or not provide financial support to large private infrastructure projects in Australia.”
The minister for resources and northern Australia has been contacted for comment.
Links
Environmental Justice Australia has lodged a formal complaint with the Productivity Commission over the prospect of the Northern Australia Infrastructure Facility partially funding the 400km rail line.
It is believed two companies – an Adani-related entity and the rail company Aurizon – have made rival bids for $1bn in government loans.
But EJA said government funding of the line would be a clear breach of competitive neutrality principles and potentially against the criteria of the “developing the north” white paper.
Competitive neutrality principles require governments not to use their legislative or fiscal powers “to advantage their own businesses over the private sector”, according to government agreements.
“We submit that for the Adani and Aurizon proposals there is no ‘market failure’ and Naif support would encroach upon the domain of the private sector in breach of competitive neutrality principles,” said the complaint, filed on behalf of the Institute for Energy Economics and Financial Analysis.
“We also submit that the Naif is non-transparent, ineffective, inefficient and has an inadequate governing framework.”
EJA based its complaint on a report by the Productivity Commission into the Export Finance and Insurance Corporation in 2012. It said said the commission found Efic should cease supporting onshore resource projects and related infrastructure because the private sector was already active in that market.
It also suggested the framework of Efic and Naif were similar, in that it had a “market gap” not “market failure” mandate.
The Naif’s mandate also dictates it must only fund projects which the board is satisfied would not otherwise receive financing.
An EJA lawyer, David Barnden, said the same finding should apply to the rail line. “Whether it’s Adani or Aurizon you’ve got a mature market where private sector is best placed to understand these risks,” he said.
“Our argument is this is a mature financing market, where there’s no market failure. The information is out there, the players know about the risk.”
EJA said there was a clear demarcation between what the government and private business should do in the “developing the north” white paper.
Naif’s mandatory criteria also includes the requirement that the funded project be of benefit to the public and “serve or have the capacity to serve multiple users”.
While Adani’s proposal for the rail line is believed to be for its sole use transporting coal between the Carmichael mine in the Galilee basin and the coastline for export, Aurizon’s has reportedly scoped for a multi-use line – albeit with Adani as the sole operator initially.
Barnden said this did not affect the group’s complaint, and suggested Aurizon would have difficulty justifying a proposal for a multi-user line because the Abbot Point terminal on the coast only had capacity for Carmichael.
“I think we’re reasonably confident that the commission will make findings which would lead to recommendations to the minister to not finance or not provide financial support to large private infrastructure projects in Australia.”
The minister for resources and northern Australia has been contacted for comment.
Links
- Adani coal mine: green groups fume over plan for $1b federal loan
- 'Irreversible consequences': Adani coalmine granted unlimited water access for 60 years
- Anti-Adani activists vow 'direct action' against mine contractor Downer
- Adani mine leases and national parks in doubt after native title court decision
- Most Australians oppose government's $1bn Adani loan for coal railway line
- Adani coalmine activists gear up to fight: ‘This will dwarf the Franklin blockade’
- Voters near proposed Adani mine oppose public loan for rail line, poll finds
- Barnaby Joyce endorses loan for Adani's Carmichael coalmine
- Adani Carmichael mine: Australia Institute demands answers from Turnbull in full-page ad
- Opposition to public funding for Adani rail link outweighs support, poll finds
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